Engineering economics

Question 4: Replacement Decisions (9 marks): warehousing company is planning to buy a new forklift today to replace an existing one. The purchase price of the new forklift is $30,000, payable immediately. Each year the forkliftis operated, you will incur operating and maintenance (O&M) cost which are provided in the table below. The forklift follows a declining balance depreciation model and the majority of the salvage values are also provided in the table below. The company uses a MARR of 10% for all financial analysis. Year End O&M Salvage Value $3 000 $18 000 $4 000 $10 800 $5620 $9 000 $3 888 $13 000 $2 333